PHL garments industry warns of more layoffs, temporary closures

REUTERS

THE PHILIPPINE garments industry is struggling amid a slump in global demand, warning of temporary closures and more worker layoffs in the next few months.

Confederation of Wearable Exporters of the Philippines (CONWEP) Executive Director Maritess Jocson-Agoncillo said factories may have to further cut their workforce if demand continues to decline. This after around 4,000 workers were laid off by garment firms in Mactan, Cebu. 

“What happened to our Mactan, Cebu-based members should not be singled out at this moment. This will be a trend for some factories whose customers are starting to cut their projections, so we expect temporary closures or partial retrenchment of workforce in the next few months,” she said at a virtual briefing on Wednesday.

In a separate Viber message, Ms. Jocson-Agoncillo clarified that around 9,440 workers employed by CONWEP members are temporarily on forced leave or have been laid off. This represents 3.5% of the 270,000-worker base, and covers four sectors: apparel, shoes, bags, and textile, she added.

“It might reach to a maximum range of 8-10% if the current trend extends longer or global demand conditions worsen,” Ms. Jocson-Agoncillo said.

The global apparel market has weakened amid the pandemic, rising inflation, supply chain disruptions and the ongoing Ukraine-Russia conflict.

Ms. Jocson-Agoncillo noted there has been a drop in consumer confidence in the United States, which is the top garments export market of the Philippines.

“This is brought about by current global trend wherein consumers tend to spend less, hold back on discretionary spending such as apparel and other consumer goods,” she said.

“The uncertainty of the war in East-Central Europe, rising fuel cost, the disrupted supply chain, and trepidation of another pandemic directly impacts on consumer behavior across the globe,” she added.   

Global clothing brands are now reducing their order projections.

“Brands and buyers would rather move their existing inventories. This is what the wearables sector is up against, when orders are canceled midstream. Some exporter-manufacturers are struggling to maintain full operations and need to lay off workers given fewer orders and operate in lesser capacity required. Affected brands are buying less,” Ms. Jocson-Agoncillo said.

She noted companies are looking to shift their portfolios out of the Philippines and into other Southeast Asian countries such as Vietnam, Cambodia and Indonesia over high labor costs, logistics and production flexibility.

“The recent wage hire order further aggravated the competitiveness of our export sector,” she added.

Based on data from the Philippine Statistics Authority, the combined Philippine exports of apparel, textile, travel goods, and footwear from January to July this year rose by 14% to $1.155 billion from $1.009 billion in the same period last year. — Revin Mikhael D. Ochave